BENGALURU (23 August): Most emerging market currencies continued to be under pressure on Friday, and China's yuan fell on concerns that US Federal Reserve Chairman Jerome Powell would later deliver a series of interest rate cuts in a speech An 11-year low
One exception was the South African rand, which gained 0.6% after the Treasury promised to cut costs and keep spending low. Most other currencies have barely changed.
The MSCI index for currencies from developing countries is on its way to a fifth consecutive week of losses. Concerns over an escalation in the US-China trade war are causing US bond markets to close to recession Horizon and slump in Argentine markets.
China's yuan dropped for the seventh time in a row, despite the central bank setting its official focus higher than expected.
The US and China show little signs of dissolving their trade conflict, which is affecting global growth. Investors are betting that policymakers will be incentivized.
However, July Fed minutes on Wednesday showed that policymakers were reluctant to make aggressive interest rate cuts, with traders holding stakes at a quarter-rate cut in September. All eyes will be on Powell's keynote speech at the Jackson Hole Symposium at 1
"Powell is likely to confirm expectations for further cuts (and stresses that the end of [quantitative tightening] is already behind us)." The chief currency strategist, Adam Cole, wrote in a note:
"Given the already aggressive market prices, however, it would require a complete turnaround from Powell to push interest rate expectations further down and we believe that the balance of risk is the USD – positive. "
Profits for most of the Asian stock markets added 0.3% to the MSCI's EM stock index, heading for its first winning week in five.
Chinese stocks posted their best weekly performance in two months after the White House economic adviser Larry Kudlow said Thursday Washington is planning another round of talks with Beijing next month.
Indian stocks rallied to revive growth in the hope of stimulus measures. Finance Minister Nirmala Sitharaman will hold a press conference later in the day. The government is reported to be able to repatriate higher taxes on foreign portfolio investors.
S & P Global will review the creditworthiness of the Lebanese state later today. Markets praise the risk of downgrading as concerns over the country's finances increase.
S & P set the country's B rating at the beginning of March to a negative outlook. Lebanon, with 150% of gross domestic product after years of slow economic growth, has one of the largest public debt burdens in the world.